The German Backlash Against TTIP

One of the things Jeb Bush did during his visit to Berlin was to express his support for the Transatlantic Trade and Investment Partnership (TTIP) and to make clear that a future Republican administration would support it. As The New York Times reports, however, the trade deal faces some of its stiffest opposition in Germany:

The backlash against TTIP has rattled political and business leaders concerned that Ms. Merkel will struggle to unite her citizens — let alone the rest of Europe’s fractious member states — behind a deal.

The German anti-TTIP backlash has been significant. Pew surveys have found that support for the trade deal had dropped 14 points since last year, and those saying that it would be a bad thing for the country increased by 11:

While there is some warranted skepticism of TTIP here in the U.S., it is much more pronounced in Germany, and opponents of the deal are much better-organized and active. It is entirely possible that the U.S. could seek to conclude the deal in the next few years only to find that European governments are unwilling to risk the ire of their voters. That raises the question of how much time and attention current and future U.S. administrations should spend on completing it. Given that the deal is likely to yield modest benefits at best, it may not be worth the trouble that reaching an agreement may involve.

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18 Responses to The German Backlash Against TTIP

The German, British, and American people are right to be suspicious of these bills. If Paul Ryan, Tom Cotton, and Barack Obama support them, they must be very rotten indeed.

I wonder how many other self-described ‘conservative’ congressmen either have voted or intend to vote for trade treaties? Some without having read them? Or, worse, without having been permitted to read them?

It’s a stupid and reckless thing to do, which is why – as with stupid and reckless decisions like intervening in Iraq – we must worry that, despite voter hostility, the bills may pass.

True free trade does not require a deal. In its simplest form, free trade is “you drop all of your tariffs and government subsidies and we’ll do the same.” These so-called free trade deals are anything but. Once again, when it comes to governments, truth is turned on its head.

Germany’s economy relies more on its small and mid-sized (Mittlestand) businesses than most other industrial countries. These so-called free trade bills usually favor big business at the expense of small business.

The USA should have much freer trade with our kindred nations, specifically to benefit all of us economically and to draw us closer together with them economically and culturally: Canada, Europe (including Eastern Europe, and not just the EU members), the UK, Australia, New Zealand.

Notice I didn’t mention Mexico, which should be viewed as something closer to an enemy than a friend, ally, or mere “rival.”

We also should be working to reduce barriers & tariffs and expand trade with Russia, but that would conflict with the US government’s apparent desire to humiliate, provoke, weaken, and encircle Russia at every turn.

Conversely, it’s a very bad idea to have “free trade” with a behemoth like China or India — with their vast supply of very low-wage but relatively capable/intelligent workers — especially when those very large competitors are protectionist and have cultures and strategic aims inconsistent with ours.

Good for the Germans. If only the American public had views more like the Germans on widespread domestic government surveillance of citizens, unnecessary non-defensive wars in the middle east and central asia, and these crooked managed-trade “free trade” deals.

When it comes to working conditions, wages, and environmental protections, so-called “free trade” agreements are always a “race to the bottom”. Whichever country or countries have the lowest level of protections for their own citizens can always underbid the country or countries with higher protections. So it is no surprise that Germany, with its strong labor and environmental protections (and the strong economy that is a direct result) would not want to be dragged down to our level.

I’m surprised that readers of this blog are opposed to the TTIP. To paraphrase the libertarian economist Arnold Kling, free trade agreements are akin to saying to your spouse, “I’ll agree to wear clean underwear if you agree to brush your teeth.” Yes, I want my wife to brush her teeth; but I should want to wear clean underwear for my own benefit in any case. Clean underwear is not a “concession” to my wife, nor is her brushing her teeth a “concession” to me.

Not only should the TTIP go through, but barring that, the US ought to unilaterally drop restrictions on imports. Although certain industries may be displaced, the economy in aggregate can only be better off by having access to cheaper goods and services. If our trade deficit widens, those dollars flowing overseas will eventually have to be reinvested in the US or redeemed for US exports in the future.

Eric, what you are saying about free trade is true, but its a big leap to say that’s true about the TTIP. That hasn’t been the experience with previous agreements. Previous agreements have been free trade in name only.

What..no ad hominam attacks? I’m shocked..shocked, by the civil level of discourse here!
I believe that one of the issues surfacing in the German voters’ perceptions is the loss of legal recourse against foreign businesses, whose activities are perceived as requiring government policy correction. These trade agreements always move trade disputes into non-legal trade dispute mechanisms, which are perceived to favor business.

“If our trade deficit widens, those dollars flowing overseas will eventually have to be reinvested in the US or redeemed for US exports in the future.”

In other words, international trickle-down economics. “That’s right folks, don’t worry that the rest of our jobs have been shipped overseas and unemployment is now 50% and rising – just as soon as those dollars come flying back, it will be all rainbows and unicorns.”

I don’t think it was partisan, pro-free trade, or anti-free trade. It seemed to me to just lay out the facts on who were the winners and losers.

For the US they concluded the following:

U.S. economic winners and losers under NAFTA vary with company size, type of industry or sector, and geographical location. Sectors affected positively include planes, trains and automobiles, large agri-businesses, appliance makers and energy corporations. Clearly, large multi-national companies with investment capacities, world-market savvy and capital resources have benefited from protected investment and cheap labor. These companies enhanced management performance-based compensation while putting downward pressure on production-worker wages and benefits, collective bargaining clout and available jobs, especially in manufacturing. Many view their actions as a major contributor to compensation inequality. …

With their lack of internal resources, small regional businesses are not offered the same opportunities by NAFTA, and in fact, the agreement makes them more vulnerable to the concentrated local effect of a multi-national competitor. U.S. manufacturing, often in concentrated geographical areas, suffered large business and job losses as NAFTA cast a shadow over any labor-intensive process that is not highly automated.

While much of the economy experienced gains, the concentration of losses in regional geographical pockets impacted by inexpensive Mexican labor sharpened the blow for many people. The availability of Mexican labor suppressed real wages, reduced benefits and limited collective bargaining power for production workers in the U.S. According to one estimate, workers in Canada and Mexico have displaced 829,280 U.S. jobs, mostly high-wage positions in manufacturing. The heaviest U.S. manufacturing-job losses were in states such as Ohio, Michigan, Pennsylvania, New York, North Carolina, Texas, Connecticut, New Jersey, California, Indiana and Florida. NAFTA proponents, however, argue that increased sales to Canada and Mexico made possible by the agreement have created new jobs and raised incomes in the U.S. overall.

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I don’t think its by chance that large corporations benefit and small businesses don’t. The corporations can influence the details of the agreement.

Johann: Thanks for the links. With all due respect, the analysis you cited doesn’t contradict my statement: free trade displaces workers, but benefits the economy in aggregate.

In fact, “free trade” in these discussions is a bit of a red herring. The real issue is that in any free market, productivity improvements will result in worker displacement. At one point 80% of American workers were employed by the agricultural sector, of which over 95% were eventually displaced by improvements in productivity. Notwithstanding the disruption this caused many of those workers, historically this development can only be viewed as a good thing. Access to labor overseas performing the same tasks as domestic workers at lower cost is no different except as regards the politics involved.

In short, there is no principled reason to oppose worker displacement when it’s due to free trade but to be ok with worker displacement when it’s due to domestic improvements in productivity.

Thanks for the reasonable response Eric. I agree there will always be winners and losers with free trade, but a real free trade agreement would be very simple. You drop your tariffs and government business subsidies and we will do the same. These fantastically convoluted agreements are not needed. The arcane language is not about “free” trade. And it really does result in more corporate power at the expense of small businesses. Its human nature to not want any upstart competition, and so the large corporations use their political influence in crafting these agreements.

I was going to dispute this, as we’re still waiting, just as the displaced in the English economy did in the mid-19th century after Free Trade took hold against their lives (fortunately, there were the gin mills to ameliorate the misery). Cheap good flooded Britain, at first good for London corporations and the population, but ultimately poverty engulfed those whose work was displaced.

But then I had the answer: displaced workers on mass scale are just an unimportant side effect (collateral damage?) for aggregate wealth creation, even if concentrated in few hyper-wealthy hands. Naturally, democratic accountability to those who would want a share in that, would be to the elites exploiting labor and keeping its portion for themselves like getting cancer.

“In short, there is no principled reason to oppose worker displacement …”

I think we’re talking principal, not principles.

As for not making our mind up as to whether corporations and the governments they employ are doing an end run around democratic accountability until we have the information, people usually keep secret what they want to hide because they are afraid of being discovered. The way they want it, critics and opponents will never find out until it’s too late. But maybe Wikileaks’ $100K bounty for the text of proposals to be given to journalists can flush the truth out. Of course, that’s just the perverted stance of the journalist imprisoned in the Ecuadorian embassy because the same people pushing TPP say he had sex without a condom, obviously a bigger crime than a billion average working folk being sodomized financially.